Widowhood Leads to Higher Out-Of-Pocket Medical Expenses

April 29, 2013

Even with assistance from Medicare, out-of-pocket medical spending can be the largest risk facing the elderly. For women, who outlive men by an average of two years from the age of 65, higher medical expenses are common despite better health outcomes. A new study by Gopi Shah Goda of Stanford University, John B. Shoven of the National Bureau of Economic Research, and Sita Nataraj Slavov of the American Enterprise Institute reports that widowed women incur higher medical expenses because they typically marry older men.

Medical care represents almost 11 percent of elderly consumer spending, which is 70 percent higher than for non-elderly consumers.

Upon widowhood, average monthly out-of-pocket medical spending rises by $34.25 and out-of-pocket nursing home expenditures increase by $24.11 per month.

When married, average spending on nursing home expenditures is only $3.68 a month, a difference of more than $20 per month.

Widowhood is associated with higher rates of nursing home stays and home health care use, according to the study's dataset, which is taken from the Health and Retirement Study, a biennial panel survey by the RAND Corporation.

The number of nights in a nursing home also increases an average of 5.7 nights after widowhood, though hospital stays do not increase.

The results suggest that living with one's spouse appears to at least proxy for paid caregivers.

The majority of the gender difference in out-of-pocket spending by the elderly cannot be explained entirely by widowhood. Instead, the results indicate that living arrangements account for 36 percent of the difference in total out-of-pocket spending.

The study suggests that women at risk of widowhood should plan for higher expenses by acquiring more life insurance, long-term care insurance and survivor annuity income.

The study also has implications for politicians who must assess the adequacy of Social Security survivor benefits and the true costs of health care.